ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Dollar Tree's annualized return on capital (ROC %) for the quarter that ended in Apr. 2026 was 12.20%.
As of today (2026-06-24), Dollar Tree's WACC % is 7.18%. Dollar Tree's ROC % is 10.39% (calculated using TTM income statement data).
Dollar Tree generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
Dollar Tree (NAS:DLTR) ROC % Explanation
ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.
There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.
Why is ROC % important?
Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.
As of today, Dollar Tree's WACC % is 7.18%. Dollar Tree's ROC % is 10.39% (calculated using TTM income statement data).
Dollar Tree generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
Be Aware
Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
Dollar Tree ROC % Related Terms
Dollar Tree ROC % Historical Data
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The historical data trend for Dollar Tree's ROC % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Note:
The Operating Income data used here is four times the quarterly (Apr. 2026) data.
The tax rate is limited to between 0% and 100%.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Dollar Tree (DLTR) has a ROC % of 12.20% as of Apr. 2026. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on Dollar Tree and its competitors.
Is Dollar Tree's ROC % too high?
Dollar Tree's current ROC % is 12.20%. The Retail - Defensive industry median ROC % is 5.54. Dollar Tree's value of 12.20% is 120.2% above this industry median. Overall, Dollar Tree has a GF Score™ of 75/100 and is considered Modestly Undervalued, reflecting its overall financial health beyond just this single metric.
How does Dollar Tree's ROC % compare to DG and BJ?
Dollar Tree's ROC % of 12.20% can be compared against companies in the Retail - Defensive industry. The industry median ROC % is 5.54. Dollar Tree's value of 12.20% is 120.2% above this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good ROC % for a Retail - Defensive company?
The median ROC % among Retail - Defensive companies is 5.54, based on 309 companies in the industry. Companies in the top quartile (top 25%) have a ROC % significantly above this median, while those in the bottom quartile fall well below. However, ROC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Dollar Tree's current ROC % of 12.20% is 120.2% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high ROC % mean?
A high ROC % can signal that a stock is expensive relative to its fundamentals. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on Dollar Tree and its competitors. For the Retail - Defensive industry, the median ROC % is 5.54 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Dollar Tree's current ROC % is 12.20%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Dollar Tree stock overvalued right now?
Based on GuruFocus' analysis, Dollar Tree (DLTR) is currently considered Modestly Undervalued. The stock's GF Value™ is $145.91, compared to a current price of $119.35 — trading 18.2% below its estimated fair value. The current ROC % is 12.20% and 120.2% above the Retail - Defensive industry median of 5.54. Dollar Tree's overall GF Score™ is 75/100 with 1 warning sign to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is ROC % calculated?
ROC % is calculated from a company's financial statements. For Dollar Tree (DLTR), the current ROC % is 12.20% as of Apr. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Dollar Tree (DLTR) Overvalued in 2026?
Based on GuruFocus' analysis, Dollar Tree stock appears to be undervalued.
The current stock price of $119.35 is trading 18.2% below its estimated GF Value™ of $145.91.
GuruFocus considers Dollar Tree to be Modestly Undervalued.
Key valuation signals for DLTR:
ROC %: 12.20%
GF Value™: $145.91 vs. price of $119.35 (18.2% below fair value)
Industry Position: 120.2% above the Retail - Defensive median
No single metric tells the full story. See the DLTR stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Founded in 1986, Dollar Tree operates almost 9,000 small-box discount stores across the United States and Canada, offering roughly 85% of its merchandise under $2. The chain targets value-conscious suburban and urban shoppers with a mix of consumables (49% of sales), variety (45%), and seasonal goods (6%). In fiscal 2025, Dollar Tree generated over $19 billion in sales, through its multi-price strategy, higher-margin discretionary assortments, and private-label products that account for nearly one-third of sales.
75GF Score
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